Member Login
  1. Category
    2. /
  2. Investing
    3. /
  3. Bank Stocks
    4. /

Bank Stocks

What are bank stocks?

Bank stocks represent partial ownership in a financial institution that’s licensed to hold and loan money. Over time, bank stocks have been relatively safe investments, as they offer products and services that most people need.

How do you choose a good bank stock? 

1. Look at the bank’s profitability

First, you want to be sure the bank is even profitable. To do that, you can use the following metrics. 

  • Return on equity (ROE): this metric tells you how much profit a bank makes from its shareholder’s equity. The higher this metric, the more efficient a bank is using its stakeholder’s money. 
  • Return on assets (ROA): the ROA tells you the overall profit a bank makes in relation to its assets. The higher the ROA, the more profit a bank makes from its assets. 
  • Efficiency ratio: the efficiency ratio tells you how much revenue a bank uses towards its operating costs. The lower the efficiency ratio, the more revenue a bank theoretically has. 

2. Assess the bank’s risks 

One of the biggest risks a bank has is losing money on an outstanding loan. As with profitability, a couple metrics could help you see how much banks are losing.

  • Nonperforming loans ratio (NPL): Nonperforming loans are loans that are at least 90 days past their due date. A bank with a low percentage of NPL (2% is a good ratio) is doing fairly well collecting loan repayments from its customers. 
  • Net charge-offs: a net charge-off is a bank’s declaration stating that a loan hasn’t been paid and is unlikely to be paid. As with NPLs, the less net charge-offs a bank has, the less money it’s losing on outstanding loans. 

3.  Check back here for our top picks 

Finally, we’ll keep this page updated with our staff writer’s reviews and assessment of Canada’s bank stocks. Our writers often use these metrics to help investors see which bank stocks are doing well and which are doing poorly. 

Check back here for the most up to date information about bank stocks in Canada.

Top Articles

Bank Stocks

Is BNS Stock a Buy in January 2023?

| Andrew Walker

Bank of Nova Scotia stocks looks cheap right now. Is this a good time to buy or should investors wait?

Read more »

Bank Stocks

TSFA or RRSP – Better Place to Stash Cash in 2023?

| Amy Legate-Wolfe

If a recession hits us hard in 2023, you'll want the ability to take out cash if you need it.…

Read more »

Dividend Stocks

TFSA Investors: Why You Should Invest Your Room ASAP With These 3 Stocks

| Adam Othman

Choosing the right TFSA stocks for your portfolio might take some time. But with the right choices, you can stick…

Read more »

Bank Stocks

Is Now the Right Time to Buy Canadian Bank Stocks?

| Andrew Button

Some bank stocks, like Toronto-Dominion Bank (TSX:TD) are doing well; others, not so much. Is it time to buy bank…

Read more »

Bank Stocks

2 Bank Stocks to Load Up on in a Recession

| Chris MacDonald

Here are two top Canadian bank stocks investors may want to consider, particularly as we potentially head into a recession.

Read more »

Bank Stocks

Better Buy: RBC Stock or the Entire TSX?

| Brian Paradza, CFA

Buying Royal Bank of Canada (TSX:RY) stock lets you invest like Warren Buffett does, but investing in the entire TSX…

Read more »

Bank Stocks

CRA: 3 Big Changes Coming to 2023 Tax Breaks

| Aditya Raghunath

Use the tax breaks to lower your tax bill and purchase blue-chip TSX stocks such as Royal Bank of Canada.

Read more »

Bank Stocks

The 1 TSX Stock I’d Go All-In On

| Andrew Button

TD Bank (TSX:TD)(NYSE:TD) stock is out of favour now but could come back in a big way.

Read more »

Recent Bank Stocks News

investment research
Energy Stocks

Got $1,000? 4 Top Canadian Stocks to Buy This Month

| Rajiv Nanjapla

Despite the volatility, these four Canadian stocks can deliver superior returns over the next two years.

Read more »

Bank Stocks

A TSX Stock to Buy if You Are Bullish on Canada’s Housing Market

| Aditya Raghunath

Here's why investors can look to buy shares of Equitable Bank (TSX:EQB) if they are bullish on the Canadian housing…

Read more »

Dividend Stocks

1 Top TSX Bank Stock to Buy in September 2021

| Chris MacDonald

Here's why long-term investors looking for a top-notch bank stock to buy right now should consider Bank of Montreal (TSX:BMO)(NYSE:BMO).

Read more »

Dividend Stocks

3 Top Canadian Stocks to Buy in September 2021

| Christopher Liew, CFA

The TSX is trending downward as concerns about the slowdown in economic recovery heightens. If you’re investing or rebalancing, the…

Read more »

Dividend Stocks

Beginner Investors: TD Bank Is a Perfect Starter Stock for You!

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) looks cheap for beginner investors, even as the broader TSX and S&P 500 continue to climb to…

Read more »

Bank Stocks

Canada Election: Are Bank Stocks in Trouble?

| Ambrose O'Callaghan

Election promises should not scare investors away from top Canadian bank stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY) today.

Read more »

Bank Stocks

Why Royal Bank (TSX:RY) Is Still a Top RRSP Stock

| Andrew Walker

Royal Bank deserves to be an anchor position in buy-and-hold retirement portfolios. Here's why.

Read more »

Dividend Stocks

RBC (TSX:RY) Reports Huge Profits: Will Dividend Restrictions Lift Soon?

| Christopher Liew, CFA

The Royal Bank of Canada stock remains a superior investment than most TSX assets even if relinquished the throne to…

Read more »

Dividend Stocks

75% Capital Gains Tax: Is This in Canada’s Future?

| Christopher Liew, CFA

All candidates of various political parties have tax-related promises, although it remains to be seen if the proposals will benefit…

Read more »

Bank Stocks

Should You Buy Bank of Montreal Stock Now?

| Andrew Walker

Bank of Montreal is up 33% this year. Are more gains on the way?

Read more »

Tech Stocks

Got $3,000? Buy 3 of the Best TSX Stocks Now

| Sneha Nahata

Shares of these companies have more than tripled in one year and could rise even further. 

Read more »

Bank Stocks

Is CIBC Stock or Royal Bank Stock a Better Buy?

| Andrew Walker

CIBC and Royal Bank have delivered strong returns this year. Is one a better bet heading into 2022 and beyond?

Read more »

Dividend Stocks

Will the TSX Rally End Soon As the Economy Contracts 1.1%?

| Christopher Liew, CFA

The TSX rally could end soon following the economy’s slowdown in Q2 2021 and the unfolding political drama. Meanwhile, income…

Read more »

Dividend Stocks

3 Top Canadian Stocks to Buy and Hold Forever

| Adam Othman

There is a significant difference between evergreen businesses and evergreen stocks. Understanding is imperative for making smart long-term holding decisions.

Read more »

Dividend Stocks

2 Key Reasons Why National Bank Stock Could Beat the Competition

| Chris MacDonald

Here's why investors looking at the Canadian banking space may want to consider National Bank of Canada (TSX:NA) stock.

Read more »

Make a choice, path to success, sign
Tech Stocks

Long-Term Investors: 4 Top Canadian Stocks to Buy Right Now

| Rajiv Nanjapla

Given their solid performance and healthy growth prospects, these four Canadian stocks could deliver substantial returns in the long run.

Read more »

money cash dividends
Bank Stocks

Passive Income: 2 Top Bank Stocks to Buy Now

| Stephanie Bedard-Chateauneuf, MBA

Bank of Montreal (TSX:BMO)(NYSE:BMO) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are two top bank stocks to buy now if you want to…

Read more »

Dividend Stocks

BMO’s Stock Price: Is BMO a Buy Now?

| Aditya Raghunath

BMO stock is trading at an attractive multiple, making the dividend-paying company a top bet for value and income investors.

Read more »

Bank Stocks

This Pair of Bank Stocks Outperforms the Big 5

| Christopher Liew, CFA

Income investors shouldn’t focus on the Big Five banks alone. National Bank of Canada stock and Laurentian Bank stock have…

Read more »

Dividend Stocks

3 Top Income Stocks I’d Buy Right Now

| Sneha Nahata

It is prudent to add a few income stocks to your portfolio to earn steady income amid wild market swings. 

Read more »

Bank Stocks

Is TD Stock Now Oversold?

| Andrew Walker

TD Bank's share price is off the 2021 highs. Is this a good time to buy TD stock, or should…

Read more »

Dividend Stocks

This Top Canadian Bank Remains a Global Favourite for Good Reason

| Chris MacDonald

Here's why long-term investors ought to consider the top Canadian bank Royal Bank of Canada (TSX:RY)(NYSE:RY) right now.

Read more »

Energy Stocks

4 Value Stocks That Could Deliver Superior Returns

| Rajiv Nanjapla

Given their attractive valuation and healthy growth prospects, these four Canadian stocks could deliver superior returns.

Read more »

Bank Stocks

Bank of Nova Scotia: Should You Buy or Sell This Stock?

| Andrew Walker

Bank of Nova Scotia might be a good stock pick today for patient investors. Here's why.

Read more »

Dividend Stocks

TSX Tops 20,800: Ready Your Safety Net Ahead of a Market Pullback

| Christopher Liew, CFA

Don’t let your guard down, despite the TSX’s continuing bull run. Make Toronto-Dominion Bank stock and Fortis stock your safety…

Read more »

Dividend Stocks

3 Highly Recommended Retirement Stocks to Buy Now

| Adam Othman

Retirement stocks need to be a decent blend of growth, dividends, and stability, especially if you are planning to stick…

Read more »

Tech Stocks

Up Over 14% in August: Can These 4 Canadian Stocks Continue the Uptrend?

| Rajiv Nanjapla

Despite the surge, these four Canadian stocks provide excellent buying opportunities.

Read more »

Tech Stocks

The 4 Best TSX Stocks With Solid Upside

| Sneha Nahata

These TSX stocks delivered stellar returns in the recent past and could continue to rise further.

Read more »

Dividend Stocks

Why Scotiabank Stock Could Continue Soaring This Quarter

| Chris MacDonald

Here's why I think investors shouldn't pass up an opportunity to buy Scotiabank (TSX:BNS)(NYSE:BNS) stock right now.

Read more »

Dividend Stocks

Time to Get Greedy With Canadian Bank Stocks?

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) isn't just one of the cheapest Canadian banks, it's also one of the best-looking dividend stocks on…

Read more »

Dividend Stocks

The 2 Best Canadian Stocks to Buy While They’re Still Cheap

| Nicholas Dobroruka

Canadian stock prices are soaring and so are valuations. Here are two top TSX picks that you can buy at…

Read more »

Dividend Stocks

4 Top Value Stocks to Buy in September 2021

| Sneha Nahata

These TSX stocks look attractive on the valuation front, implying further upside in their prices in the medium to long…

Read more »

Dividend Stocks

3 High-Yield Dividend Stocks You Should Never Sell

| Christopher Liew, CFA

An investment portfolio of only the top dividend payers could set you up for life. The trio of the Bank…

Read more »

Tech Stocks

3 of the Best Growth Stocks I’d Buy Right Now

| Sneha Nahata

These stocks have multiple growth catalysts to fuel future growth. 

Read more »

Bank Stocks

How Does RBC (TSX:RY) Compare to the Bank Sector?

| Stephanie Bedard-Chateauneuf, MBA

RBC (TSX:RY) is one of the best Canadian bank stocks to buy and hold until retirement. It compares favourably to…

Read more »

Dividend Stocks

5 Top TSX Stocks to Watch in September 2021

| Andrew Button

Top TSX stocks like Shopify Inc (TSX:SHOP)(NYSE:SHOP) are in for some interesting action in September.

Read more »

Bank Stocks

Should You Buy CIBC Stock Right Now?

| Andrew Walker

CIBC stock has already doubled off the 2020 low. How high could the stock go?

Read more »

Dividend Stocks

3 TSX Stocks That Could Set You Up for Life

| Christopher Liew, CFA

Be worry-free in the sunset years by setting up a portfolio of Dividend Aristocrats. National Bank of Canada stock, Pembina…

Read more »

Bank Stocks

This 4.2% Dividend Stock Is a Must-Have

| Vishesh Raisinghani

Dividend stocks like Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are must-haves.

Read more »

Tech Stocks

3 Top TSX Stock Picks for September 2021

| Sneha Nahata

Canadian stocks could trend higher on the back of improved economic activities and continued shift towards digital platforms.  

Read more »

Frequently Asked Questions

Why invest in bank stocks?

Quality bank stocks have a strong history of generating profits and managing crises, making them a great investment.

In addition to their strong performance, many of Canada’s top banks pay dividends, with payouts that increase over time. For Canadian investors looking to pocket a little extra from their stocks, dividends can help you buy more shares or more cash.

Finally, bank stocks can help diversify your investing portfolio. If you already have stocks in other sectors (mining, technology, energy), bank stocks could add much needed stability, as well as expose you to the gains in another sector.